Last Night I Dreamt Of MM2H

I have been involved as a lawyer in Malaysia My Second Home, or MM2H, since the programme was launched twenty-four years ago. Over the years, I have seen the programme and our immigration rules change many times—sometimes after careful thought, sometimes quite suddenly, and occasionally with little explanation or consultation.

So when people ask me whether the current MM2H is better than the old one, I hesitate to give a simple answer. The short answer is this: we have improved some things, but we have also lost sight of what made MM2H attractive in the first place.

When MM2H started in 2002, the idea was quite simple. Malaysia would allow foreigners to live here on a long-term basis. In return, they would bring money into Malaysia, deposit it into a local bank and spend it here. It was good for the foreigner and it was good for Malaysia. For many years, it worked reasonably well. Many other countries eventually tried to emulate us.

Then, in 2021, during the global Covid lockdown, the programme was suspended and the rules were substantially changed. Applications that had already been submitted were returned, with little reason given. The programme was suspended for a prolonged period and eventually relaunched with substantially higher financial requirements and more conditions.

The intention was understandable. We wanted applicants with deeper pockets who could make a greater economic contribution, including through property purchases. But I think we made one mistake along the way. We started judging the quality of applicants mainly by how much money they had. But wealth does not necessarily tell us whether someone will make a good long-term resident, or tell us much about their background.

What is an ideal MM2H applicant? Suppose you have two applicants. One has USD 1 million to place in a fixed deposit. Another has USD150,000. The first looks better on paper. But suppose the second applicant comes with a wife and two children. They buy a house. Their children attend an international school. They eat out regularly. They employ domestic help. They travel around Malaysia. They use Malaysian hospitals and services. They may spend RM200,000 or RM300,000 a year in Malaysia. Who is more valuable to the Malaysian economy?

The answer is not as obvious as it first appears. This is why I think the current three-tiered system is a sensible development. We should not have only one definition of the “right” foreigner. There are wealthy investors, but there are also retirees, entrepreneurs and families looking for education. There are people who want an alternative base in Asia. They all have something to offer.

There is another issue we should consider: diversity. A successful residency programme should ideally attract people from a broad range of countries and backgrounds. Yet the current MM2H programme has a significant concentration of applicants from just two source countries, which account for around 70% of participants, with China alone accounting for about 53%. While this brings substantial foreign investment into our property market, it also raises the question of whether the programme is attracting the breadth of international residents Malaysia could potentially welcome. A more diverse community of participants would bring different businesses, skills, cultures, networks and connections to Malaysia.

One thing about the current programme does worry me. MM2H is increasingly being sold as a property scheme. In the past, it was promoted by licensed MM2H agents with experience in migration and international relocation. Today, the programme is often being sold by property developers and estate agents with MM2H licence as a “Buy Property, Get MM2H” two-in-one deal. Depending on the category, an applicant must purchase a residential property of at least RM600,000, RM1 million or RM2 million. The SEZ/SFZ category is tied to Forest City.

That the government wants foreign money to flow into the Malaysian property market is understandable and even desirable. But we should remember something. Foreigners do not come to Malaysia because they want to buy a RM1 million apartment. They buy the apartment because they have decided they want to live here. That distinction is important.

What newcomers are really buying is the opportunity for a new life in Malaysia. They are attracted by our healthcare and schools, our safety and stability, our food and culture, and the convenience of living here. They can enjoy a high standard of living at a relatively reasonable cost, while Malaysia’s excellent connectivity makes it easy and affordable to travel to Shanghai, Delhi, Tokyo, Dubai or back home.

But most importantly, they want to feel comfortable living here — to feel that Malaysia can truly be a place they can call home. The property is only one part of the package. What they are really buying is a lifestyle and the opportunity to build a future in Malaysia.

Malaysia has much more to offer than simply a long-stay visa. Too often, when we talk about MM2H, the conversation starts and ends with how much money applicants must put in the bank and how much they must spend on a house. But MM2H is not a permanent residence or second-passport programme. If we want people to choose Malaysia as their second home, we should also tell them what a second home really means — and why they would actually want to live here.

Because a foreigner does not move his family halfway around the world for a visa. He moves because he sees a future here.This is where Malaysia excels. It gives people something more than a comfortable place to live. It gives them a place where they can build a future — one that, for many foreigners, is still surprisingly affordable. We don’t have to be the cheapest country.

But there is something more important than money. After many years of dealing with overseas clients, I have found that people considering MM2H are often less concerned about the exact amount of the fixed deposit than we think.

They want to know: Will the rules change again? That is a fair question. Imagine you are 50 years old. You sell your home overseas. You bring your family to Malaysia. You buy a property, place a substantial part of your savings in a Malaysian bank, enrol your children in school and begin building a new life here. You are not making a decision for two or three years. You are deciding where you and your family may live for the next 10, 20 or even 30 years. When you make that kind of commitment, you need to know that the rules will be clear and consistent.

That is why the decision is more than about a house or a visa. People are deciding whether they can see themselves — and their families — living here for years to come. They are not choosing a retirement getaway or holiday destination. They are, in a quiet, careful and very practical way, choosing a future. And that makes stability rather important. For a second-home programme, stability is almost as important as affordability.

Malaysia is not the only sandwich in the shop. Thailand, the Philippines, Turkey, Dubai and a growing number of European countries are all competing for the same people we want to attract. And these places have plenty to offer too. Good infrastructure, good healthcare, good schools, an attractive lifestyle, and in some cases, the possibility of eventually obtaining a passport.

The wealthy foreigner or skilled expatriate is not short of options. They can choose where they want to live, raise their family and put down roots. Malaysia has to give them a good reason to choose us — and to stay.

That is why we should never allow what happened to MM2H in 2021 to happen again. The intention was understandable. There is nothing wrong with wanting applicants who can contribute more to the Malaysian economy, or with wanting to raise the overall quality of the programme. Those are reasonable goals for any country.

The problem was that we went too far. In trying to make MM2H more valuable to Malaysia, we made it considerably less attractive to the very people we were hoping to attract. The programme became too heavily focused on financial thresholds and property investment and in the process, we risked forgetting what made MM2H appealing in the first place. MM2H, as the name suggests, is about making a home, not making an investment. It should be about building a home first, and buying a house second.

Kerk Boon Leng

Russia Remembering

This week, on 22 June eighty-five years ago, Europe united under the Nazis launched Operation Barbarossa, the largest military invasion in history, against the Soviet Union — a country that then included Russia, Ukraine, and several other republics. The price paid by the Soviet people was unimaginable: 27 million dead, soldiers and civilians alike. A sacrifice so enormous that it is difficult for people today below the age of 65 to comprehend.

And yet history has a strange way of repeating itself.

The land that absorbed the full force of Hitler’s war machine, the people who buried an entire generation fighting Nazism, are once again standing across the battlefield. The narrative has flipped, but not the motive. The old invader is rebranded; the old defender is now portrayed as the aggressor.

From Napoleon to Hitler, Russia’s history has been shaped by repeated invasions from the West. Today, once again, Europe and its NATO Rottweilers and front-gate Baltic Chihuahuas and Pomeranians are involved in a war against Russia, this time through a heavily funded proxy, the Ukrainian government led by Zelensky. Drones and missiles cross borders, and many civilians are caught in the violence. The names and uniforms may change, but for Russia the memory of invasion runs deep.

What is perhaps even more astonishing is how much the world itself has been turned upside down by three decades of runaway Western-style globalisation.

The globalist promise was that borders would disappear, cultures would blend, and the world would become more prosperous. Instead, it has created a world where supply chains stretch across continents; local industries, forests, languages, cultures, and families disappear; and nations compete in a race where everyone is either lost, lazy, greedy, or vulnerable.

Imagine a Taoist priest predicting in the 1990s that the best cars in the world would one day come from China, not Germany; that Dubai would become known for luxury chocolate, not Switzerland; and that Southeast Asians would fly to Japan, not just Thailand, for a cheap holiday experience.

The world we were told we must treasure and protect has already disappeared.

Perhaps the biggest illusion of our age is believing that history moves only in one direction — towards science, progress, and intelligence — and that humans will never return to barbarity, ignorance, and the Stone Age.

Three Tax Traps for your Foreign-sourced Income (FSI)

Income tax is famously complex, even Einstein said it’s a nightmare. Malaysian tax rules used to be easy: earn here, pay here. Earn somewhere else? Nobody cared. None of our business. But since 2022, that’s over.

Bring your foreign cash back, and the Malaysia’s Inland Revenue Board or LHDN is waiting. Not full-on U.S. style worldwide tax, but enough to make you call your tax adviser or think twice about where you earn and where you dare to spend it.

Here are the three common misconceptions about Malaysia’s new Foreign-Sourced Income (FSI) rules:

1. The “Foreign Client Equal Foreign Income” Mistake

Many people assume that if the client is overseas, the income is foreign-sourced.

That is often wrong. Under Malaysian tax principles applied by LHDN Malaysia, the key question is: where are the services actually performed?

Example:

• Lawyer in Kuala Lumpur advising a client in Sydney.

• Consultant in Penang working online for a US company.

Even though the client is overseas, the work is performed in Malaysia, so the income is usually Malaysian-sourced and taxable in Malaysia.

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2. The “Leave Your Money Overseas” Assumption

Some believe that if they leave the money in a foreign bank account, Malaysia cannot tax it but the issue is more nuanced.

If income is genuinely foreign-sourced, it may only be taxed when it is remitted into Malaysia under the post-2022, FSI rules.

However, if the income is actually Malaysian-sourced, then it is taxable regardless of where the money is kept. So, simply keeping funds in Singapore, Hong Kong, or Dubai, does not automatically make the income foreign-sourced.

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3. The Repatriation Trap

Even when income is truly foreign-sourced, tax may arise when the money is received in Malaysia.

For example:

• Overseas Investment Profits

• Dividends from Foreign Companies

• Consulting Income earned while physically working overseas.

If the money is later transferred to Malaysia, this may trigger Malaysian tax depending on applicable exemptions and conditions. (More on this in our next post)

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For Malaysian tax residents, it comes down to two questions:

Where did the income actually come from? Did you bring that foreign income into Malaysia?

Answer these, and you’ll know if the taxman is knocking.

10 WAYS TO FORCE YOUR EMPLOYEES TO VACCINATE

With the pandemic raging and ravaging our country, the news that government is at last allowing businesses to open up is a welcome relief. Our government, ever vigilant and respectful of human rights and the need to protect public health, is mandating employers to mandate their employees to vaccinate.

Datuk Seri Saravanan, the Human Resource Minister, said so himself.

Here are 10 legal steps that companies should take before mandating vaccination on employees:

1. INJECTION MUST BE IMMUNISATION

Humans are the result of at least half a million years of miraculous biology and design. The human body is created with amazing disease-fighting capabilities and rejuvenation but due to modern lifestyles and diseases our body sometimes need some extra help from science. Hence the need for vaccines to give us immunity from deadly diseases.

Please read up and do your research on whether the vaccines are actually effective in preventing the spread of disease in your workplace. Because if vaccines do not actually prevent the disease, then mandating them in support of government policy may just amount to a lulled sense of security and virtue signaling.

The law allows government to direct (not mandate) vaccines only if they are scientifically proven to be immunisation against a disease. If it is not, then government should instead direct (not mandate) treatment.

2. DRUG REGISTRATION

Malaysia is world-famous for its tough and unmoving stance on illegal and illicit drug selling and consumption. Illegal drug dealers are mandatorily hanged; therefore, it should surprise no one that Malaysia has very stringent regulations on the approval and registration of new drugs and medicines before they are allowed to be sold and used by the population.

In most things in life there are of course exceptions: the World Health Organisation (WHO) says there is now a pandemic. The vaccines that they are now pushing as immunisation have been given emergency and conditional approval for use.

Please take the effort to find out what vaccines your employees are asked to take and whether these have been properly registered including finding out about their storage, handling protocol and shelf lives. Do not be shy to ask for information regarding their origin and whether clinical trials have been conducted on their safety and efficacy.

3. ADVERSE EFFECTS

Nothing good in life comes without a cost. There is no free lunch. Although the vaccines are given free, we will still need to pay for any possible side effects.

Take the time to learn about any adverse effect of vaccination.

Although we believe our new Health Minister that no one has so far died in Malaysia after full vaccination; life, illness and mortality are often less technical than that. In fact, they can be dead real. If the cure turns out to be worse than the disease, vaccination can have devastating consequences on workplace productivity and of course, morale.

As employer, you must by law, spell out and explain to your employees all possible side effects and consequences of vaccination. Although much information and news have been dressed up and are not available in the mainstream media, you can easily find out about them from the vaccine manufacturer’s information booklet as well as from groups compiling information on AEFI (Adverse Effects Following Immunisation).

4. INFORMED CONSENT

The law is sometimes an ass. While you as the boss can order your staff to register for vaccination, the law on medical negligence and tort requires your staff (and not you) to give consent.

This is the reason in the government form that your staff has to sign before getting the injection it must first be declared that he has been given full information about the vaccine and side effects and that he freely and willingly gives his consent to the medical procedure. Therefore, as a responsible employer, you need to explain to your staff carefully and in detail about all possible risks so that in the event of any medical misadventure, you will not be liable in law for any consequences.

In short, your company must not be an indirect party to any medical negligence brought about by the lack of a valid and informed consent.

5. EMPLOYMENT CONTRACT

These days with all the chest thumping by the government about the virtue of vaccine, you are forgiven as employer for thinking that ‘no jab no job’ has been written into law. It has not.

The government is only passing the buck to you as employer. Your relationship with your employee is bound by contract. Before you tell your employee that they must be inoculated or be sacked, please ensure that such terms or regulations have been contracted for at the time your employees join your company. Labour laws do not allow employers to change any term or condition of employment without the employee’s agreement or consent.

Your company may have a handbook that is reviewed and updated from time-to-time. Such reviews and updates must still relate to day-to-day and ordinary work duties and obligations of the worker. For example, a restaurant owner can order his cook to take a hepatitis jab but an IT outsourcing company cannot do the same to his telemarketer.

6. FEAR & COERCION

Believe it or not, health, according to the WHO, is “a state of complete physical, mental and social well-being and not merely the absence of disease.” Like everyone around them, your employees and workers have suffered enough. They have endured a long duration of social restrictions, loss of income and purposelessness. They deserve fairness, if not your sympathy.

Coercion and fear are powerful motivation and incentives for action but they must be carefully managed. To prevent your staff from complaining to the labour officer about workplace coercion, you will need to carefully educate your workforce about the balance between individual medical liberty and the need to protect other employees from disease. The best way to do this is to encourage an atmosphere of discussion, education, and transparency in matters of health and individual responsibilities.

Please be aware that under the Occupational Safety and Health Act (OSHA) you are not allowed to sack any employee simply on the grounds that he or she refuses to comply with company procedure on grounds of fear about safety.

Calling your staff an anti-vaxxer, selfish or an irresponsible spreader of disease is counterproductive and frankly, legally and morally quite wrong.

7. CARROTS

Government, both here and abroad has dangled lots of incentives ranging from free doughnuts to lucky draw cars to encourage vaccination. There is nothing in law to stop you from doing the same.  You can give cash handouts and other goodies but must be careful not to make the rewards discriminatory.

Bonuses are always dependent on performance unless you declare that this year’s bonus hinges upon obedience and health and not job performance. Using bonus to promote vaccination can be seen as an unfair exercise of corporate discretion and discriminatory labour practice.

8. LONGER STICKS & DISMISSAL

Large companies especially government-linked ones are using executive policies of the government as their basis to mandate employee vaccination. Often these sudden company policies made without consultation or discussion with employees take the form of directives from CEO or Board of Directors to ensure compliance.

Of course, companies as corporate citizens have a duty to follow the law but they cannot blur the distinction between private and public in their eagerness to be seen to be doing the right thing. Such directives from the top cannot exceed the powers of the law unless vaccines are mandatory in law which at present it is not. No company can simply rely on supposition of law as law itself to force employee to comply.

Taking disciplinary actions against employees for not complying with company policies based on supposition of law can lead to claims of unfair dismissal. Companies must be careful in taking disciplinary action because not every command made outside the bounds of employment can be treated as insubordination and misconduct.

9. COMPENSATION

Put your money where your mouth is. If you believe in vaccine as the only way for business and society to get back to normal, then you must be prepared to wager for the truth.

Nothing is more powerful and confidence instilling than a boss who announces a comprehensive compensation and indemnification policy to all his staff that in the event of injury, incapacitation or death he would make a payout to cover the unfortunate staff’s hospital bills, the upkeep of his surviving family and bereavement expenses.

For example, if a company forces all its employees regardless of their physical abilities to go on a company’s teambuilding trip to the Everest Base Camp, then the company should be prepared to foot the bill for any accidents or evacuations that may occur. Refusal by the company to offer any compensation or indemnification can be seen as absolving liability for its action and having something to hide.

10. THE BUSINESS OF GOVERNMENT

Remember your company belongs to you, not the government. The business of a company is to make profit and avoid loss. You have no business nor responsibility to manage the pandemic. That is the government’s job.

At the time of writing, Malaysia does not have any law mandating vaccination. You must make this clear.

What the government is only doing is to force companies and employers who in turn force their employees and staff to vaccinate. This situation is not unique to Malaysia, it is practised worldwide, especially in countries eager to comply with the coercive measures recommended by WHO and its global agencies and allies.

Companies need to understand this. That unlike government which mandates to rule and govern are fixed and prescribed until the next election, companies are organic and in law perpetual. Their growth and strength are determined by how long they are able to stay fit and in the game.

Therefore, as government policies shift with science and geopolitics, companies must ensure that their rules of engagement with their most valuable assets – their human resources do not get compromised by this vacillation in vaccine mandate.

The government knows that mandating vaccination is hard, messy and unpopular. It knows that it cannot mandate vaccination. That is why it is doing it through ­you.

4 September 2021